LG.Philips to move assembly lines to China

LCD manufacturing giant LG.Philips LCD will move assembly plants to China “as soon as possible” to cut costs, the company's CEO told reporters this week.

The company currently operates labour-intensive LCD module assembly plants in its home base of South Korea, as well as in Poland and China, according to the Korea Times. The module assembly plants take finished LCD panels from LG.Philip's high tech LCD fabs, and build them into working LCD units with backlights and power supply components.

Amidst tough price competition in the LCD market, the company has just reported its fourth consecutive quarterly operating loss.

While cost cutting efforts continue, analysts who met with LG.Philips executives this week say the company is optimistic that slightly more favourable market conditions are on the way. “Management expects a strong improvement in earnings during the second quarter, and hinted at TV panel shortages from the third quarter onwards,” reported Tokyo-based Nomura Securities' Finance and Economic Research Center yesterday.

LCD TV Panels account for half of the company's revenues, so any increase in demand would be significant. Despite the anticipated tightening in supply, the company does not expect TV panel prices to rise, but merely to decline more slowly – by about 5 per cent during the second quarter.

LG.Philips also faces a change of ownership, and of name, as founding partner, Philips, is seeking a buyer for its one third share. Plasma display panel leader Matsushita has denied that it is interested in complementing its product mix by investing in the company, according to the Korea Times.